Slower take-up rates could hurt property stocks' performance

The outperformance of property stocks historically showed the highest correlation to take-up rates.

The anticipated slower property sell-through rates amidst more launch units in August could continue to dampen the performance of property stock’s prices, CGS-CIMB said. They noted that property stocks’ outperformance has historically shown the highest correlation to take-up rates.

“As such, we believe property stocks would continue to remain range-bound in the near term,” the firm explained.

They noted that private condo sales crashed 27% YTD to 6,476 units.

“Whilst replacement demand from displaced en bloc sellers could provide some support for transaction volumes, overall, we expect the cooling measures to have a dampening effect on buying sentiment and pricing expectations,” the firm commented.

CGS-CIMB also believes that any significant price retracement or prolonged land holding period could hit development margins with the recent hike in land prices that consequently resulted to high landbank cost. They added that good sell-through rates and faster asset turn are key to preserving development margins.

Meanwhile, the firm noted that the Tre Ver launch which sold 22% of its 729 units within the first month of launch at an average of $1,551 psf.

In August, home sales dropped 64.3% MoM to 616 units in August from selling about 1,724 units back in July. Including executive condominiums (EC), 639 new private homes were sold.